Vermont HOA Lien Priority and Recording Rules

Vermont HOA Lien Priority and Recording Rules

Vermont does not have a state statute that establishes where an HOA lien sits in priority relative to a mortgage lien. Your association's ability to collect unpaid assessments through a lien depends on your declaration of covenants, common law first in time first in right principles, and the date you record the lien with your town clerk. The Vermont Attorney General's office oversees consumer protection issues related to HOAs, but lien priority disputes typically resolve through Vermont Superior Court.

How Lien Priority Works Without a State Statute

In the absence of a specific Vermont statute on HOA lien priority, courts apply the common law rule that priority generally follows the order of recording. If your association records a lien for unpaid assessments on June 1, 2025, and a mortgage holder records its lien on August 15, 2025, your HOA lien takes priority. If the mortgage was recorded first, the mortgage holder's lien takes priority over your later recorded assessment lien.

This means your association's lien almost always sits behind the first mortgage in priority because the mortgage is recorded when the owner purchases the property, long before any assessments go unpaid. However, your declaration may include language that creates a contractual lien that attaches at the time of purchase, giving your association stronger collection rights even if the formal lien document is recorded later.

Vermont town clerks charge recording fees that vary by municipality. In Chittenden County, the town clerk's office in Burlington charges $10 for the first page of a recorded document and $3 for each additional page as of 2025. Your association will pay these fees when you record a lien, and you can typically add the recording cost to the amount owed by the delinquent owner.

What Your Declaration Says About Liens

Your declaration of covenants controls whether your association has a lien right at all and what priority that lien claims. Many Vermont condo and HOA declarations include a provision that states the association's lien for unpaid assessments is prior to all other liens except tax liens and first mortgages. This language does not override state law, but it clarifies the parties' intent and can strengthen your position in court.

If your declaration is silent on lien priority, you operate under the default common law rule. A 2019 dispute involving the Green Mountain Homeowners Association in Stowe illustrated this gap. The association's declaration did not specify lien priority, and when a unit owner defaulted on both HOA assessments and a second mortgage, the association and the second mortgage holder both claimed priority. The matter settled before trial, but the association spent more than $8,000 in legal fees to protect its claim.

Review your declaration now to confirm whether it includes a lien priority clause. If the document is silent or ambiguous, consider proposing an amendment that clearly states the association's lien is subordinate to first mortgages but superior to all other encumbrances except tax liens. This language aligns with common practice in Vermont and gives future boards clear guidance.

Recording Your Lien

When an owner fails to pay assessments, your board must follow the process in your bylaws to authorize a lien. Typical steps include sending a demand letter, waiting a cure period of 30 to 60 days, and then voting to authorize the lien. Once the board votes, your association's attorney prepares a notice of lien that includes the owner's name, the property's legal description, the amount owed, and the date through which assessments are calculated.

You file the notice of lien with the town clerk in the municipality where the property is located. Vermont has 14 counties and 255 towns, and each town clerk maintains land records independently. There is no statewide electronic recording system, so you or your attorney must submit the lien document directly to the town clerk's office. Some town clerks accept documents by mail, while others require in person filing.

The town clerk stamps the document with the date and time of recording and assigns a book and page number. This recorded lien becomes part of the public record and appears in title searches. When the owner attempts to sell or refinance the property, the title company will discover your lien and require payment before closing.

What Happens in Foreclosure

If the owner does not pay the lien, your association can foreclose. Vermont allows both judicial foreclosure, which requires filing a lawsuit in superior court, and strict foreclosure, which is less common. Judicial foreclosure typically takes 12 to 18 months and costs $10,000 to $25,000 in legal fees and court costs.

During foreclosure, lien priority determines the order in which creditors are paid from the sale proceeds. Tax liens take first priority. The first mortgage holder takes second priority. Your HOA lien and any junior liens follow. If the sale proceeds are insufficient to pay all creditors, the creditors lower in priority receive nothing.

This reality makes foreclosure an expensive and uncertain option for associations, especially when the property is underwater or the first mortgage balance is high. Many Vermont associations pursue collection through payment plans, small claims court judgments, or settlement rather than foreclosure.

Super Priority and Special Assessments

Some states grant HOA liens super priority status for a limited number of months of assessments, meaning that portion of the lien takes priority over even the first mortgage. Vermont does not have a super priority statute. Your association's lien is either fully subordinate to the first mortgage or fully superior depending on the order of recording and the language in your declaration.

Special assessments for capital improvements are treated the same as regular assessments under Vermont common law. If your association levies a $5,000 special assessment to replace a roof and the owner fails to pay, you can record a lien for that amount using the same process you would use for monthly dues. The lien's priority is determined by the recording date, not by whether the assessment is regular or special.

The Role of the Attorney General

The Vermont Attorney General's Consumer Assistance Program handles complaints about unfair or deceptive practices by businesses, including HOAs. If an owner believes your association has violated consumer protection law by recording an improper lien or charging excessive fees, the owner can file a complaint with the Attorney General's office. The office investigates and may mediate the dispute or refer the matter to court.

Your board should document every step of the lien process to defend against complaints. Keep copies of demand letters, board meeting minutes authorizing the lien, the recorded lien document, and all correspondence with the owner. Consult your attorney for your specific situation before recording a lien to confirm your declaration allows it and your process complies with your governing documents.

What You Should Do Now

Pull your declaration and bylaws and review the provisions related to assessments and liens. Identify whether your documents specify lien priority, the notice period before recording a lien, and the procedure for foreclosure. If your documents are silent or unclear, work with your attorney to draft an amendment that fills the gaps.

Create a written collections policy that sets out the timeline for late notices, demand letters, and lien recording. Many Vermont associations use a 30 day late notice, a 60 day demand letter, and a 90 day lien filing as standard intervals. Share this policy with your members so they understand the consequences of non payment.

Before you record a lien, obtain a title search to confirm the property's current encumbrances. This search will show you whether the owner has a first mortgage, a second mortgage, or other liens. Knowing the property's lien stack helps you assess whether foreclosure is a realistic option or whether a payment plan is more practical.

Manorway's AI assisted platform helps you track delinquent accounts, schedule demand letters, and store lien documents in a single location. When your board uses a centralized system to manage collections, you reduce the risk of missing deadlines and create a complete record for your attorney and auditors.